PKF UPDATE – Rumblings from the Offshore World
With CRS compliance deadlines looming world-wide, the Offshore World as we know it is preparing to tighten its belt and soldier through with a slew of planned regulations coming into place. Tectonic rumblings from popular jurisdictions are discussed below in brief:
BVI’s Beneficial Ownership Database
The British Virgin Islands’ beneficial ownership database has been officially launched. The “Beneficial Ownership Secure Search system” (BOSS) is a searchable platform, which provides the territory’s law enforcement authorities with direct and immediate access to verified beneficial ownership information on the ownership of companies in the territory. The platform also meets the international standards of the Financial Action Task Force (FATF), the global body tasked with combatting money laundering and countering the financing of terrorism. The database, was rolled out so that the BVI could comply with its obligations under the Exchange of Notes agreement entered into with the UK in April 2016 (UK Exchange of Notes).
Under the BOSS system, registered agents, though not other BVI institutions, must record basic information about certain UBOs of the BVI companies they administer in the BOSS database. In turn, law enforcement officials in the BVI, in accordance with the UK Exchange of Notes and applicable legislative safeguards, may search that system for the UBO information in order to exchange it with the UK. Each registered agent in the BVI will maintain its own database. Information maintained on each database will be confidential to the registered agent and will be accessible externally only by specially designated BVI law enforcement officials.
Access to BOSS is permissible only from a physical location in the BVI and only following a formal request from the BVI competent authorities: the BVI Financial Investigation Agency, the BVI Financial Services Commission, the BVI International Tax Authority and the BVI’s Attorney General’s Chambers. The identity of each designated person competent to search the BOSS database will be publicly gazetted in secondary legislation in due course. The BVI competent authorities may request the designated person to search BOSS solely in order to assist the BVI in complying with its obligations under the UK Exchange of Notes.
This would mean that a request would need to originate from the UK authorities before a search of BOSS can take place in the BVI.
IOM Regulator Issues Beneficial Ownership Guidance
The Isle of Man’s financial services regulator, the Isle of Man Financial Services Authority, has published guidance on the Beneficial Ownership Act 2017, which requires the identification of the beneficial owners of the island’s corporate and legal entities. The Act, and a central database of beneficial ownership that went live on July 1, 2017, were developed following the island’s commitment to the UK last year to enhance the sharing of information about the ownership of Isle of Man-based entities.
Information held on the central database will not be public and will only be accessible by a small number of designated officials in a limited number of Isle of Man authorities and, on request to the island’s Financial Intelligence Unit, by the intelligence and law enforcement agencies of countries with which the Isle of Man has a beneficial ownership sharing agreement (currently only the UK).
A “beneficial owner” is defined as a natural person who ultimately owns or controls more than 25 percent of a legal entity, in whole or in part, through direct or indirect ownership or control of shares, voting rights, or other ownership interests in that entity, or who exercises control via other means.
The Act requires details of any registrable beneficial owner to be submitted electronically to the Isle of Man’s central database of beneficial ownership by an entity’s nominated officer or relevant corporate service provider. Access to the database is restricted.
Seychelles toes the line
The Seychelles International Business Companies Bill, 2016 was passed by the Legislature of Seychelles in October 2016 to reform and modernize Seychelles International Business companies law as per best international standards, FATF and OECD.
The International Business Companies Act, 2016 came into operation on 1st December 2016 to keep its Register of Directors at its Registered Office in Seychelles and file a copy of such register with the Registrar of Companies as well. Under the IBC Act, the new IBCs which incorporate on or after the Commencement Date are required to file a copy of the Register of Directors with the Registrar of Companies within 30 days of the appointment of the First Directors. Any subsequent change shall be filed with the Registrar within 30 days of the change. For the pre-existing companies incorporated prior to the Commencement Date, a copy of the Register of Directors shall be filed within 12 months of the Commencement Date, i.e. by 1 December 2017.
Except for listed IBCs and their subsidiaries, all IBCs are also required to keep a Beneficial Owners Register at its registered office address.
This is just the beginning and it is anticipated that to fall in line with the global trend to try and ensure 100% transparency, the age-old concept of offshore ‘secrecy’ will soon be a thing of the past. The rumblings across the offshore world are meant to create a tectonic shift in the way the world sees ‘tax havens’ and definitely pave the way for a brave new world where shady business dealings and opaque structures and holdings will be relegated to being just unproved urban legends.
(Compiled by Chaitanya G. Kirtikar Senior Manager Offshore and Free Zone Department )